Gold & Silver Daily

Ed's Critical Reads

Dec 17, 2014

The MSM Misleads Again: Housing Starts Didn’t ‘Weaken’ A Tad In November, They Plunged

Don’t believe everything you read in the mainstream media. Especially don’t believe anything in the financial news media until you’ve looked at the data yourself.  It’s no wonder investors are so often caught flatfooted in the markets. Financial “journalists” feed their readers and viewers a constant stream of misinformation and bad data. Financial reporters are so atrocious at serving their audience I have to believe that they are, wittingly or unwittingly, part of a deliberate and elaborate campaign of disinformation… unless you believe in Coincidence Theory.

Housing starts collapsed in November. They weren’t good, they weren’t even so-so as media reports intimated. The seasonally adjusted annualized number which the paid flacks report is absolute nonsense. It’s fiction.

Actual, not seasonally adjusted single family starts were down by 10,400 units in November to 47,700 units. November is always a down month but this was the worst November performance since 2008, in the teeth of the housing crash.  On a year to year basis starts were down by 6.3%. It’s absurd that you can’t find that fact anywhere near the mainstream media headlines. In fact, Bloomberg outright lied about it.

This commentary by Lee Adler appeared on David Stockman's website yesterday sometime---and today's first story is courtesy of Roy Stephens.

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Federal Reserve Reinflating Real Estate Bubble - Mike Maloney

This 5:51 minute video clip with Mike Maloney put in an appearance on the Internet site yesterday sometime.  I thank Dan Rubock for sending it my way.

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Oil plunge, Russia crisis challenge U.S. Federal Reserve

The relentless fall in oil prices and Russia's plunging currency pose big challenges as the US Federal Reserve opens a two-day meeting Tuesday.

The Fed's last meeting of 2014 was expected to confirm its path toward monetary policy normalization after holding its base interest rate at the zero level for six years to bring the country out of the Great Recession.

But stagnating economies in Europe and Japan and slowing growth in China, coupled with the threats to markets and the financial system from the oil price and Russian crises, could force the US central bank to weigh a pause.

While the world's most powerful central bank is unlikely to make any immediate changes to its interest rate and liquidity stance, it could signal via comments and economic forecasts a readiness to stick to that stance for longer than expected to help the global economy through a rough period.

This AFP article, filed from Washington, appeared on the Internet site at 5:16 p.m. EST on Tuesday---and it's the first offering of the day from South African reader B.V.

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Obama will sign Russia sanctions bill despite reservations

The bill - which primarily sanctions Russia's defence industries - passed with overwhelming support in Congress.

Spokesman Josh Earnest said the bill sent "a confusing message to our allies" but Mr Obama will sign it because it "preserves flexibility".

Russia's rouble has lost half its value this year amid lower oil prices and Western sanctions.

The currency went into free-fall in trading on Tuesday.

The bill would also give Mr Obama the authority to provide lethal and non-lethal military assistance to Ukraine, but not require him to do so.

This short article appeared on the Internet site at 4:39 p.m. EST yesterday afternoon---and it's the second offering of the day from Roy Stephens.

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T. Boone Pickens on where oil prices will settle

This 6:08 minute video interview from Fox Business was posted on the Internet site at 8:41 p.m. EST on Monday evening---and I thank reader William Gebhardt for sending it along.

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$1 Trillion in Global CapEx at "Unambiguous" Risk as a Result of Crude Crash

Just like with the Mohammed Islam story, the religious belief by the cheerleading crew that the crashing price of oil is so "unambiguously, unquestionably, indisputably" good for the U.S. is so taken for granted, that nobody actually checked the facts.  So here is one such attempt by the Financial Times, which writes that "almost $1 trillion of spending on future oil projects is at risk as a result of the plunge in crude to $60."

The price plunge has shaken the energy industry, throwing some of the majors’ most ambitious plans into doubt and pummeling oil company shares. Projects in challenging frontier regions like the deep waters of the Gulf of Mexico are predicated on high oil prices and may not be economic with oil at $60 a barrel — the level Brent was trading at on Monday afternoon.

Goldman has examined 400 oil and gas fields around the world, many of which are still awaiting a final investment decision. Its analysis, based on a $70 oil price, shows that fields representing 2.3m b/d of output by 2020 and awaiting a green light have now become uneconomic. That figure rises to 7.5m b/d of production by 2025. The analysis excludes U.S. shale.

The bank shows that companies will need to cut costs by up to 30 per cent — for example by forcing suppliers to take steep price cuts — to make these projects profitable at $70 a barrel.

This Zero Hedge article appeared on their Internet site at 10:58 a.m. EST on Tuesday---and it's the first contribution of the day from Manitoba reader U.M.

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Jim Rickards: Same Currency War, New Battle Phase

The current global currency war started in 2010. My book, Currency Wars, came out a little bit after that. One of the points that I made in the book is that the world is not always in a currency war. But when we are, they can last for a very long time. They can last for five, 10 or 15 years, sometimes longer.

And so it’s really not a surprise that here we are in 2014 talking about currency wars because it’s the same on that’s been going on. A lot of what you read or see on the TV is after some policy move by, let’s say, Japan to weaken the yen. And reporters will say: “Hey, there’s a currency war going on,” or “There’s a new currency war.”

I roll my eyes a little bit and go: “No, this is the same one, the same currency war; it’s just a new phase or new battle.”

So yes, it is going on. And it does have a lot of explanatory power. It’s one of the most important things going on in economics today. I think a year from now, I’ll be writing to you and we’ll still be talking about it.

This commentary by Jim appeared on the Internet site on Monday sometime---and it's courtesy of Harold Jacobsen.

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Venezuela—The Sequel

The government fixing of prices in grocery stores has caused unnaturally low prices on many staple goods. A predictable result has been that Venezuelans have been cleaning out the shelves at supermarkets and taking the goods to neighbouring Colombia for resale. (Colombia maintains free-market pricing, and as such, a profit can be made by Venezuelans.)

Typically, such staples as meat, grains, and toilet paper are bought immediately upon delivery to the supermarkets in Venezuela. Shortages are so significant that people frequently queue at supermarkets in shifts, as the waits are so long to receive goods.

This movie is, of course, ongoing. Historically, however, food shortages tend to occur in the latter stages of a decline, just prior to collapse of the system. (No fear is more gripping in the minds of a population than the fear of starvation, and already, in the last year, food prices have nearly doubled in Venezuela.)

This commentary by Jeff Thomas appeared on the Internet site on Monday---and I thank their senior editor Nick Giambruno for sending it along yesterday.

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German Private Sector Activity Hits 18 Month Low: Report

The German private sector, considered the backbone of the country's economy, expanded at the slowest pace in 18 months in December, increasing the risk that growth will slow further at the beginning of 2015, said a report released by the Markit Economics research group Tuesday.

"Today's flash PMI [Purchasing Managers' Index for manufacturing and services] results showed that private sector output growth in Germany slowed further in December. The pace of expansion was in fact the weakest in one-and-a-half years and well below levels seen earlier in the year, when GDP grew 0.8%," the author of the study Oliver Kolodseike said in comments to the report.

Kolodseike suggested that the reduction of oil prices and energy costs gave German private companies a chance to lower prices, but do not help the firms attract new customers.

Overall German company performance has also been affected by the recent train operator and airline pilot strikes in Germany in late October and November of this year.

This short business news item showed up on the Internet site at 6:58 p.m. Moscow time on their Tuesday afternoon, which was 8:58 a.m. in New York.  I thank South African reader B.V. for sharing it with us.

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Chevron suspends Ukrainian shale efforts

U.S. energy company Chevron said it was still looking for opportunities in Ukraine, but opted to shelve a contract to tap the country's shale gas potential.

In October, members of a regional council in Ukraine approved a draft production agreement for shale natural gas with Chevron. The deal was formalized in November.

Ukraine is one of the Eastern European countries thought to be rich in shale natural gas and the government estimates there may be enough natural gas in shale plays to meet the country's needs without imports.

Peter Clark, country manager for Chevron, told the Kiev Post the company terminated the production agreement because of legislative hurdles in Ukraine.

This very interesting UPI story showed up on their website at 8:01 a.m. EST yesterday---and I thank Roy Stephens for sharing it with us.

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The Real Reason Shell Halted Its Ukrainian Shale Operations

Royal Dutch Shell has blamed air strikes by the government in Kiev against its own citizens in southern Ukraine as the reason it decided to declare a halt to its shale oil projects in the troubled region.

In reality, the truth may be closer to the fact that company is disappointed with the economic viability of what it once thought was a large shale deposit and is looking for a way out.

After a series of dramatic statements and the signing of a $410-million letter of intent, a veil of uncertainty is being drawn around the myth of Ukrainian shale.

According to a recent statement by the former head of Royal Dutch Shell, Peter Voser, “the company is now analyzing its business in shale,” which, translated from the streamlined language of press releases, means: The project is not earning its keep and we need to do something (Read: write off expenses).

This very interesting article [datelined 19 June 2014] put in an appearance on the Internet site---and it's definitely worth reading in light of the UPI/Chevron article posted above it.  I thank Brad Robertson for digging this up on our behalf.

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Putin Discusses Donbas Situation With Merkel, Hollande, Poroshenko: Kremlin

Russian President Vladimir Putin has held a telephone conversation with German Chancellor Angela Merkel, French President Francois Hollande and Ukrainian President Petro Poroshenko, discussing the situation in Donbas (Ukraine's southeastern regions), the Kremlin's press service announced Wednesday.

The Kremlin's statement stressed "the importance of a swift meeting of the Contact Group with the aim of implementing the Minsk agreements and facilitating dialogue between Kiev and [Ukraine's] southeast".

"The issues of the economic recovery of the affected regions [Donbas] and the provision of humanitarian and social support to the [local] population have [also] been discussed," the statement added.

This news item, filed from Moscow, showed up on the website at 2:02 a.m. Moscow time on their Wednesday morning---and it's another contribution from Roy Stephens.

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THE INTERVIEW: 'We will survive sanctions,’ says Russian foreign minister

“Russia will not only survive but will come out much stronger,” he said, brushing aside concerns about the country's crisis-hit economy. “We have been in much worse situations in our history and every time we have got out of our fix much stronger.”

Lavrov pulled no punches over his contempt for Western-imposed sanctions, levied against Russia for its alleged meddling in a pro-Moscow insurgency in eastern Ukraine following the ouster of the pro-Kremlin president in February. 

He saved his most scathing comments for the E.U.: “Of course sanctions hurt, but I don’t believe the sanctions will help the European Union. The United States ordered the E.U. to impose sanctions and frankly we have overestimated the independence of the European Union [from the U.S.].”

“Sanctions are a sign of irritation, they are not the instrument of serious policies,” he added.

This must watch video interview, especially for any serious student of the New Great Game, showed up on the Internet site yesterday afternoon.  It runs for a surprising 25:15 minutes.  There is a transcript, but it's tiny.  It's another offering from reader B.V.

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The Russian Ruble is Hereby Halted Until Further Notice

Earlier, we reported that various currency brokers such as FXCM and FxPro, would - as a result of the soaring liquidity in the USD/RUB pair - suspend trading in the Russian Ruble (while other merely hiked margins to ridiculous levels). It appears things have escalated again, and as FXCM just reported, instead of just politely advising clients not to open new USD/RUB position tomorrow, it has advised anyone long, or short, the USD/RUB that their positions will be forcibly shut in moments.

So for those curious why there appears to be a collapse in Ruble volatility in the past few hours which in turn has sent both stocks and crude soaring, the answer is simple: nobody is trading it!

And this is what happened following the post: as soon as all those short the RUB (long USD/RUB) realized they have to take profits, the USD/RUB tumbled some 500 pips (!) in the process sending stocks surging.

This must read news item, along with some excellent charts, appeared on the Zero Hedge website at 2:20 p.m. EST yesterday---and I thank 'David in California' for sending it our way.

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George Friedman: Viewing Russia From the Inside

Last week I flew into Moscow, arriving at 4:30 p.m. on Dec. 8. It gets dark in Moscow around that time, and the sun doesn't rise until about 10 a.m. at this time of the year — the so-called Black Days versus White Nights. For anyone used to life closer to the equator, this is unsettling. It is the first sign that you are not only in a foreign country, which I am used to, but also in a foreign environment. Yet as we drove toward downtown Moscow, well over an hour away, the traffic, the road work, were all commonplace. Moscow has three airports, and we flew into the farthest one from downtown, Domodedovo — the primary international airport. There is endless renovation going on in Moscow, and while it holds up traffic, it indicates that prosperity continues, at least in the capital.

Our host met us and we quickly went to work getting a sense of each other and talking about the events of the day. He had spent a great deal of time in the United States and was far more familiar with the nuances of American life than I was with Russian. In that he was the perfect host, translating his country to me, always with the spin of a Russian patriot, which he surely was. We talked as we drove into Moscow, managing to dive deep into the subject.

From him, and from conversations with Russian experts on most of the regions of the world — students at the Institute of International Relations — and with a handful of what I took to be ordinary citizens (not employed by government agencies engaged in managing Russia's foreign and economic affairs), I gained a sense of Russia's concerns. The concerns are what you might expect. The emphasis and order of those concerns were not.

This commentary by Stratfor Chairman George Friedman appeared on their Internet site at 9:02 a.m. GMT yesterday---and it's definitely worth reading, especially for all serious students of the New Great Game.  It will take you 15 minutes to run through this, but it's more than worth it if you have the interest.  The first reader through the door with this yesterday was Roy Stephens.

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Oil Trades Near 5-Year Low as Russia Matches OPEC Output Policy

Oil in New York traded near a five-year low as Russia reiterated that it will keep crude production steady next year, echoing OPEC’s strategy to refrain from curbing supply to tackle a global surplus.

Futures fell as much as 2.4 percent after sliding below $54 a barrel yesterday for the first time since May 2009. Output from Russia, the world’s largest crude producer, will be similar to this year’s 10.6 million barrels a day, according to Energy Minister Alexander Novak. Iran is said to be offering shipments to Asia at the deepest discount in at least 14 years, taking a cue from Saudi Arabia in cutting price differentials.

Oil has slumped 44 percent this year as a surge in shale drilling lifted U.S. output to the fastest pace in three decades amid slowing world demand growth. Leading members of the Organization of Petroleum Exporting Countries such as Saudi Arabia have resisted calls from smaller producers including Venezuela and Ecuador to reduce quotas to stem the price rout.

“OPEC won’t make a move unless the U.S. cuts its production first, and for now it looks like the game of chicken will most likely continue through next year,” Kang Yoo Jin, a commodities analyst at Woori Investment & Securities Co. in Seoul, said by phone. “As oil prices are slumping, it seems to be a strategic decision for producing countries including OPEC and Russia to keep their output levels unchanged.”

This Bloomberg story, filed from Seoul, South Korea on Wednesday morning, appeared on their website at 10:45 p.m. MST on Tuesday evening.  Marin Katusa passed it around the Casey Research crowd late last night.

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Russia's Alternative to SWIFT Would Cause Big Problems for the West

The international financial system is based on the U.S. dollar. The greenback is both the world’s “reserve currency” — the one everyone wants to hold when things go bad — and the principal means of exchange. The vast majority of transactions between companies, countries and people are denominated in dollars.

As my investment-oriented colleagues regularly discuss on this page, the dollar’s dominance isn’t unchallenged. The Chinese yuan, in particular, has pretensions to become a second global currency, one so widely used that transactions unrelated to China could be conducted in yuan.

But there’s another challenge on the horizon … a new international interbank system that could create important opportunities — or chaos — for the world economy, depending on how the proverbial ball bounces.

This very interesting commentary showed up on the Internet site yesterday---via The Sovereign Investor.  It's also courtesy of Roy Stephens.

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Erdogan speech indicates deep rift with E.U.

Turkish leader Recep Tayyip Erdogan has told the EU to “mind its own business” on free press, marking an ever-deeper rift in relations.

He made the comments at a speech in the Tupras oil refinery outside Istanbul on Monday (15 December) after European officials criticised his latest arrests of opposition-linked journalists.

“They cry press freedom, but they [the arrests] have nothing to do with this … We have no concern about what the EU might say, whether the EU accepts us as members or not, we have no such concern. Please keep your wisdom to yourself”, he said.

“The EU should not intervene in acts taken by the police and judiciary against entities that jeopardise our national security. It should mind its own business”.

This news item, filed from Brussels, appeared on the Internet site at 8:43 a.m. on their Tuesday morning---and it's the final offering of the day from Roy Stephens, and I thank him on your behalf.

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China’s Treasury Holdings Fall to Lowest Since February 2013

China’s holdings of U.S. Treasuries fell to a 20-month low in October, as yuan appreciation indicated less of an impetus to buy the government securities.

China held $1.25 trillion in U.S. debt as of October, a $13.6 billion drop from September, the Treasury Department said in a monthly report today. The nation remains the largest foreign holder, ahead of Japan, whose stockpile increased $0.6 billion to $1.22 trillion, reducing the gap between the two countries to the narrowest since September 2012.

The yuan rose 0.4 percent against the dollar in October as the government moves toward a market-determined exchange rate, part of efforts to expand the currency’s use worldwide. The less China intervenes to weaken its currency, the less it needs to buy securities such as Treasuries.

“The lack of growth in their Treasury portfolio has been happening throughout this year, so I tend to think it’s more of a structural trend that’s developing,” said Stanley Sun, an interest-rates strategy analyst at Nomura Securities International Inc. in New York. He said he expects “a grind lower rather than any sharp decline” in holdings.

This Bloomberg article, filed from Washington, was posted on their website at 3:53 p.m. Denver time on Monday afternoon---and I thank reader M.A. for bringing it to our attention.

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Traders betting Russia's next move will be to sell gold

Russia’s surprise interest-rate increase failed to stop the plummeting ruble. The next weapon available to repair economic havoc caused by sanctions and falling oil prices: selling gold.

Russia holds about 1,169.5 metric tons of the precious metal, the central bank said last month. That’s about 10 percent of its foreign reserves, according to the London-based World Gold Council. The country added 150 tons this year through Nov. 18, central bank Governor Elvira Nabiullina told lawmakers. 

Russia’s cash pile has dropped to a five-year low as its central bank spent more than $80 billion trying to slow the ruble’s retreat. The currency’s collapse combined with more than a 40 percent tumble in oil prices this year is robbing Russia of the hard currency it needs in the face of sanctions imposed after President Vladimir Putin’s annexation of Crimea. A fall in gold prices signals that traders are betting that the country will tap its reserves.

I'll be amazed if Russia taps its gold reserves---and I expect an update with their November Central Bank gold purchases on Friday.  This Bloomberg story showed up on their website sometime yesterday afternoon Denver time, but was updated just before midnight.  It also carries another propaganda line about Russia's annexation of the Crimea.  I found it in a GATA release yesterday.

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Commodity Trading Giant Exits Physical Gold Due to "Lack of Physical With a Documented Origin"

Back in March, otherwise very under-the-radar Swiss commodities trading giant Gunvor and the fifth largest oil trader in the world, made headlines in the press when one of its then-Russian owners, billionaire Gennady Timchenko (estimated net worth of $8.5 billion), sold his entire 44% stake in the company to his partner in the firm, Torbjorn Tonqvist, just a day before the U.S. revealed its first round of sanctions against individuals affiliated with the Putin regime. Timchenko was among them. As a result of the sale, however, Gunvor avoided falling on the U.S. sanctions list and a Treasury official said that "Gunvor Group Ltd. isn’t subject to automatic blocking from dealing with U.S. persons under Russian sanctions because co-founder Gennady Timchenko owns less than 50 percent of the company."

Since then the Geneva-based company rarely appeared in the media which is how the nondescript company liked it. Until last week, that is, when Bloomberg reported that the company was giving up trading physical precious metals, read gold, less than a year after the commodity house started a business dedicated to buying and selling gold. Gunvor is, or rather was, one of the few large commodity firms that handles precious metals.

But the biggest surprise in this story was the reason why Gunvor chose to discontinues its gold trading. Per Bloomberg, "executives decided to abandon the precious metals trading business partly because of difficulties in finding steady supplies of gold where the origin could be well documented, one of the people said."

I'm not sure what to make of this Zero Hedge/Bloomberg piece that appeared on their Internet site at 10:35 p.m. EST last night.  It's worth reading---and I thank reader 'David in California' for sending it along.

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Gold hedging creeps back

Mining companies are set to increase their outstanding net forward gold sales by between 42 and 52 tonnes in 2014, the largest expansion of the global gold hedge book of any year since 1999, an industry report said on Tuesday.

In their quarterly Global Hedge Book Analysis, Société Générale and GFMS analysts at Thomson Reuters said although the global hedge book shrank by 6 tonnes in the third quarter and will contract further in the fourth, they still expect net hedging in the full year.

Increased hedging would theoretically be negative for gold prices, as forward sales add to supply as gold is leased and sold forward. But despite the recent price drop, mining companies are wary of a wholesale return to hedging, after they lost billions of dollars unwinding hedged positions in the mid 2000s.

No gold mining company will sell their production forward at these prices---and even if they did, these small amounts are not even close to being material.  This Reuters story, filed from London yesterday, is much ado about nothing.  I thank reader U.M. for bringing it to my attention---and now to yours.

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Gold Imports ‘Phenomenal’ In India - 571 Percent Surge To 150 Tonnes in November

India's gold imports were over a staggering 150 tonnes in November and have seen a "phenomenal" rise in India according to India’s Trade Secretary, Rajeev Kher.

A few weeks ago we said that the death of the Indian gold market was greatly exaggerated. The latest gold import data out of India confirms this.

The import restrictions on gold that were imposed on Indians in August of 2013 were lifted at the end of last month. Despite the fact that the restrictions were still in place gold importation in November surged an incredible 571% relative to the same month last year at over 151.58 tonnes.

This was an increase of 38 percent from 109.55 tonnes a month earlier, trade ministry data showed on Tuesday.

261 tonnes of gold imports in two months for India is a huge amount---and along with what China's taking off the market, one has to wonder where all this gold is coming from.  This commentary on Indian gold imports by Mark O'Byrne appeared on the Internet site yesterday---and is worth your while.

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India to weigh gold policy impact after jump in November imports

India will weigh the impact of last month's easing of gold import rules after inbound shipments jumped 38 percent in November to push its trade deficit to an 18-month high, Trade Secretary Rajeev Kher said on Tuesday.

In a surprise move, the world's second-biggest gold consumer scrapped a rule for traders to export 20 percent of all gold imports, belying expectations for tighter curbs instead.

After the change, gold imports surged to 151.58 tonnes in November, an increase of 38 percent from 109.55 tonnes a month earlier, trade ministry data showed on Tuesday.

This gold-related Reuters story, filed from Mumbai, was posted on their Internet site at 10:25 p.m IST on their Tuesday evening---and contains a lot of the same information that was in Mark's column posted above, but there is other information, so it's worth your while if you have the time.  I thank Manitoba reader U.M. for her final contribution in today's column.

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Lower Barrick ore grades, Midas sale cuts into U.S. gold output by 7 percent Y.T.D.

U.S. gold mine production declined 7% in the first nine months of this year, the U.S. Geological Survey has reported.

The decline was partly attributed to lower production from Barrick Gold Corp. and Newmont Mining.

Barrick’s Cortez Mine in northern Nevada produced 21,600 kg (684,451 troy ounces) in the first nine months of this year for a 36% decline in output, which was attributed to a lower ore grade.

Production for Newmont’s Nevada operations during the same period also dropped 10% to 34,600 kg (1,112,407 oz) because of the sale of the Midas Mine and a development phase that will increase waste stripping and decrease mill throughput at several mines, said the USGS.

The production decreases were partially offset by Rio Tinto’s Bingham Canyon Mine with 7,060 kg (226,982 oz) in the first nine months of the year, a 70% increase over the same period of last year when the operation was still recovering from a massive landslide.

There are a lot of facts and figures in this news item that appeared on the Internet site yesterday---and it's definitely worth your while if you're into numbers.

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Dec 16, 2014

Gross: U.S. structural growth rate to be about 2% or less

Bill Gross said in an exclusive interview with CNBC on Monday that economic growth will likely fall to 2 percent.

"Yes, we're starting from a 3 percent growth economy that will probably persist for another quarter or so," he said. "We get back to a relatively new structural growth rate, which is not 3 but probably 2 or even less."

He attributed the decline to falling oil prices, which in turn affects industries such as fracking. Oil's slide also "determines currency movements," setting off a chain reaction.  Gross said it would be "very difficult" for oil prices to stabilize.

Financial conditions are also problem, Gross said.

This short story appeared on the CNBC website Monday afternoon---and I thank reader Dan Lazicki for today's first item.

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FOMC Decision on 'A Considerable Period'

The Federal Reserve will decide [this] week whether interest rates will remain low for “a considerable period” or perhaps some other time frame designated by central bank policy makers.

The policy-setting Federal Open Markets Committee meets for two days -- Tuesday and Wednesday -- with an announcement scheduled for 2 p.m. EST Wednesday and a press conference by Fed Chair Janet Yellen to follow.

The Fed is widely expected to address the timing of interest rate hikes, possibly by altering the language of its statement to eliminate the phrase “a considerable period,” which was added earlier this year to describe how long rates would stay low after the Fed ended its monthly bond-buying program.

The bond buying program ended in October and markets are on edge as to when the Fed will raise rates and how they will communicate that move. Most analysts have interpreted the “considerable period” phrase to mean about six months, which would match with the consensus belief that the Fed will start raising rates in mid-2015.

Jim Rickards says that the Fed won't raise rates again, ever.  We'll see.  This article appeared on the Internet site on Friday---and I thank Dr. David Richardson for sharing it with us.

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Matt Taibbi: Dodd-Frank Budget Fight Proves Democrats Are a Bunch of Stuffed Suits

If the Democrats actually stood for anything other than sounding as progressive as possible without offending their financial backers, then they would do what Republicans always do in these situations: force a shutdown to save their legislation. How many times did Republicans hold the budget hostage to rescue the Bush tax cuts?

But the Democrats won't do that here, because they're not a real party. They're a marketing phenomenon, a big chunk of oligarchical Blob cleverly sold to voters as the more reasonable and less nakedly corrupt wing of a two-headed political establishment.

So they'll punt on this issue in the name of "maturity" or "bipartisanship," Wall Street will get a nice win, and Hillary Clinton or whoever else is being set up as the Blob candidate on the Democratic side will receive an avalanche of Financial Services donations to stave off Warren (who will begin appearing in the press as an unhinged combination of Lev Trotsky and Spartacus). A neat little piece of business all around. I don't know whether to applaud or throw up.  

This short [for Matt] blog showed up on the Internet site on Saturday---and I thank Manitoba reader U.M. for finding it for us.

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The Oil-Price-Shock Contagion-Transmission Pathway

As we noted previously, counterparty risk concerns (and thus financial system fragility) are starting to rear their ugly heads. In the mid 2000s, it was massive one-way levered bets on "house prices will never go down again."

When the cracks started to appear, the mark-to-market losses in derivatives led to forced liquidations and snowballed systemically. In the mid 2010s, it is massively levered one-way asymmetric bets on "commodity prices [oil] will never go down again."

Meet WTI-structured-notes... the transmission mechanism for oil-price-shocks blowing up the financial system.   Because nothing says exuberant ignorance like limited upside, unlimited downside OTC (illiquid) derivatives...

Here's BNP Paribas' 1-Yr WTI-linked notes that collapse if oil drops below $70...

This short, but very interesting Zero Hedge article appeared on their Internet site at 7:00 p.m. on Sunday evening---and it's worth a minute of your time.  My thanks go out to reader U.D. for passing it around.

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Oil Rot Spreading in Credit

Credit investors are preparing for the worst.

They’re cleaning up their portfolios, selling riskier debt that’s harder to trade in bad times and hoarding longer-term government bonds that do best in souring markets. While investors have pruned energy-related holdings in particular as oil prices plunge, they’re also getting rid of other types of corporate bonds, causing yields to surge to the highest in more than a year.

“We believe the pervasive nature of the sell-off is more reflective of overall liquidity concerns in the cash market than of fundamental deterioration,” Barclays Plc analysts Jeffrey Meli and Bradley Rogoff wrote in a report today. “The weakness, while certainly most pronounced in the energy sector, has been broad based.”

Rather than waiting around for a trigger to escalate this month’s sell off, investors are pulling out of dollar-denominated corporate debt now, causing a 0.8 percent decline in the notes this month, according to a Bank of America Merrill Lynch index that includes investment-grade and junk-rated securities. This would be the first month of losses since September.

This short Bloomberg piece, filed from New York, appeared on their website at 10:14 a.m. Denver time on Friday morning---and it's the second offering of the day from Dan Lazicki.

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U.S. isolated, BRICS to get greater voting power at IMF

Months after the formation of new financial institutions like the $100 billion BRICS Bank and the China-led Asia Infrastructure Investment Bank, Christine Lagarde, managing director of the International Monetary Fund (IMF), said Friday that the organization is ready to discuss IMF voting reforms without the United States to give BRICS and emerging countries greater voting power.

Lagarde said the IMF is disappointed with the US inaction to ratify the governance and quota reforms and will now move forward without Washington.

“The IMF’s membership has been calling on and was expecting the United States to approve the IMF’s 2010 Quota and Governance Reforms by year-end. Adoption of the reforms remains critical to strengthen the Fund’s credibility, legitimacy, and effectiveness, and to ensure it has sufficient permanent resources to meet its members’ needs,” Lagarde said in a statement.

“I have now been informed by the U.S. Administration that the reforms are not included in the budget legislation currently before the U.S. Congress. I have expressed my disappointment to the U.S authorities and hope that they continue to work toward speedy ratification,” she said.

It will be a frosty day in July [in the northern hemisphere] before the U.S. gives up it's veto power---and unless that happens, how the BRIC countries, plus others, divide up the percentage of the vote, it just doesn't matter.  This new items showed up on Internet site early on Saturday morning---and I thank South African reader B.V. for bringing it to our attention.

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On the Brink of War and Economic Collapse — Paul Craig Roberts

On occasion a reader will ask if I can give readers some good news. The answer is: not unless I lie to you like “your” government and the mainstream media do. If you want faked “good news,” you need to retreat into The Matrix. In exchange for less stress and worry, you will be led unknowingly into financial ruin and nuclear Armageddon.

If you want to be forewarned, and possibly prepared, for what “your” government is bringing you, and have some small chance of redirecting the course of events, read and support this site. It is your site. I already know these things. I write for you.

The neoconservatives, a small group of warmongers strongly allied with the military/industrial complex and Israel, gave us Granada and the Contras affair in Nicaragua. President Reagan fired them, and they were prosecuted, but subsequently pardoned by Reagan’s successor, George H.W. Bush.

Ensconced in think tanks and protected by Israeli and military/security complex money, the neoconservatives reemerged in the Clinton administration and engineered the breakup of Yugoslavia, the war against Serbia, and the expansion of NATO to Russia’s borders.

This is an absolute must read, especially if you're a serious student of the New Great Game.  It was posted on Paul's website last Friday---and even though several readers sent it in time for my Saturday column, I decided not to post it.  I've since changed my mind---and for good reason now that I've actually read it from start to finish.  I thank Malcolm Roberts for sending it.

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The Bank of England has missed its opportunity for greater transparency

Thursday’s publication and adoption of the Warsh review into transparency will change little. The date of publication of the minutes will be brought forward to coincide with the announcement of the interest rate decision, but they will not be transcripts. They will be only be published eight years later, some three years behind the five-year rule employed by the US Federal Reserve, with the Bank citing the UK’s six-to-eight-year business cycle as the prime reason behind the chosen delay. The European Central Bank, that bastion of openness, doesn’t publish its transcripts for 30 years, the Bank’s spinner pointed out, as if that made everything alright.

Even when these transcripts are published, they will not be in full. Instead they will be partial versions – missing out day one of the meetings when all the main discussion is said to take place – with publication due to start in 2023, some nine years from now. The argument for holding back on some of the transcripts is because, Bank sources hint, MPC members want to be able to speak freely, without fear of being held to something they’d said in jest eight years later.

Of course, it means that members can continue to espouse their own opinions in public, without the public knowing that they might have contradicted what they expressed behind closed doors.

This commentary was posted on The Telegraph's website at 8:48 p.m. GMT last Thursday---and I found it in a GATA release.

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Belgium paralysed by general strike

The entire Belgian airspace is closed on Monday (15 December), as well as high-speed trains from Brussels to London, Paris and Amsterdam and local buses, trams and metro lines, as part of a general strike over public sector cuts.

Schools, government offices and private firms are also likely to be closed on Monday. Garbage will not be picked up and newspapers will not be delivered.

Serious traffic jams are expected around Brussels and Antwerp, with transport trade unions calling on truck drivers to join in and "paralyse the country".

Trade unions already staged a huge march which ended in violent clashes with police a month ago, when the government first announced the plans to save €11 billion over the next five years. The measures include scrapping an automatic indexation of salaries next year and raising the retirement age from 65 to 67 from 2030.

This news item, filed from Brussels, put in an appearance on the Internet site at 9:09 a.m. Europe time on Monday morning---and it's the first offering of the day from Roy Stephens.

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Red-Faced Germans Forced to Ask Russia a Favor

Ukraine is apparently close to financial collapse: According to a report by FT the Finance Minister Wolfgang Schaeuble is said to have called his Russian counterpart Anton Siluanow: Schäuble is said to have asked the Russians to not demand repayment of a loan, that Kremlin had granted Ukraine last year, but to reschedule. The credit is 3 billion and could possibly trigger insolvency. The Russians have hedged their loans in elaborate legal contracts.

The IMF has identified a $15 billion deep hole in the Ukrainian government finances. This must be "filled within weeks to prevent the financial collapse," citing the FT the IMF. 15 billion dollars are needed in addition to those $17 billion, which the IMF Ukraine granted in April as credit. 

The IMF is concerned about the situation because of the willingness of the IMF states is small, to provide Ukraine new money. Finally, there have been no reforms, corruption flourishes unchanged and Western financial institutions are not impressed by an American as the Ukrainian Finance Minister says the E.U. Observer.

This story, originally posted on the German Economic News website---and translated into English by Google Translate---was picked up by the Internet site late on Monday morning Moscow time.  This item is courtesy of Roy Stephens as well.  It's worth reading.

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E.U. Foreign Policy Chief Expects New Sanctions Against Crimea on Dec.18

E.U. foreign affairs chief Federica Mogherini said Monday that additional E.U. sanctions against Crimea could be announced as early as on December 18.

Speaking at a news conference following the first Association Council meeting between the European Union and Ukraine, Mogherini said that in addition to the expanded individual sanctions list the E.U. will most likely introduce this week restrictive economic measures against Crimea.

"Just today in the Foreign Affairs Council we restated unanimously the political commitment for swift implementation of the part of the sanctions that were already decided, so I would expect the work at the working group level to be finalized in these very same hours and then a written procedure could finalize their implementation in time for the European Council [meeting] on Thursday," Mogherini said.

According to a draft E.U. document on the expansion of sanctions against Crimea, leaked to the media, the new restrictive measures include the prohibition for E.U. firms to invest in the region, as well as the ban on trading E.U. oil and gas exploration technologies.

This story, filed from Brussels, appeared on the website at 10:59 p.m. Moscow time on their Monday evening---and it's courtesy of Roy Stephens once again.

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Ukraine needs national referendum on NATO membership - PM

The issue of Ukraine’s possible accession to NATO requires a nationwide referendum, Ukrainian Prime Minister Arseny Yatsenyuk said Monday after a meeting in the Belgian capital with the North Atlantic alliance’s secretary general, Jens Stoltenberg.

“In line with current Ukrainian legislation, we will have to hold a referendum on the proposed agenda of NATO membership,” Yatsenyuk said.

He said that in order to join NATO, Ukraine also has to conduct reforms in the sphere of security, politics, economics and justice in order to bring them in line with NATO standards.

“We will keep following that roadmap,” Yatsenyuk said.

He said that “if the Ukrainian people speaks in favor of joining NATO in the referendum, this will allow Kiev to not only request but demand NATO membership.”

The above four paragraphs are all there is to this brief news item, filed from Brussels, that showed up on the Internet site shortly before midnight Moscow time last night.  It's the third contribution in a row from Roy Stephens.

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U.N. concerned by Kiev’s economic blockade of eastern Ukraine

The United Nations in its report on Monday expressed concerns about Kiev’s decision to relocate all state institutions and organizations in the areas not under the government’s control in the country’s east.

The report released by the Office of the U.N. High Commissioner for Human Rights in Geneva said these steps could aggravate the situation which “is becoming increasingly dire for the population still living in the east,” and could violate people’s social and economic rights.

“With the onset of winter and no let-up in the hostilities, the situation of approximately 5.25 million people living in the conflict and post-conflict affected areas is further deteriorating due to significant damage of the infrastructure, the breakdown of economic activities, and the disruption of social and medical services and social welfare benefits,” the report reads.

This story, filed from Geneva, was posted on the Internet site at 4:13 p.m. Moscow time yesterday afternoon, which was 8:13 a.m. in New York.  Once again my thanks go out to Roy Stephens.

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Russia Warns May Send Troops to Ukraine After Congress Unanimously Votes to Give Lethal Aid to Kiev

While the market, and America's media, was focusing over the passage of the Cromnibus, and whether Wall Street would dump a few hundred trillion in derivatives on the laps of US taxpayers once again (it did), quietly and unanimously both houses passed The Ukraine Freedom Support Act of 2014, which authorizes "providing lethal assistance to Ukraine’s military" as well as sweeping sanctions on Russia’s energy sector.

The measure mandates sanctions against Rosoboronexport, the state agency that promotes Russia’s defense exports and arms trade. It also would require sanctions on OAO Gazprom (GAZP), the world’s largest extractor of natural gas, if the state-controlled company withholds supplies to other European nations (yes, the U.S. is now in the preemptive punishment business, and is enforcing sanctions on a "what if" basis).

But while one may debate if additional sanctions will do much to impact a Russian economy which is already impaired due to the plunging ruble, the clear escalation is that unlike previously, when the US limited itself - at least on paper - to non-lethal assistance to the Ukraine, now the US is finally preparing to send in weapons, and potentially "military advisors" as well. We say "on paper", because in late November hacked U.S. documents revealed the extent of secret U.S. "Lethal Aid" for the Ukraine army. And since America's under-the-table support for Ukraine's insolvent armed forces has been revealed, there is little point in pretending to keep a moral upper hand (especially in light of recent "other" revelations involving the U.S., most notably its intelligence services).

This Zero Hedge piece was posted on their website at 12:47 p.m. EST on Sunday afternoon---and it's courtesy of reader M.A.

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Russia Increases Key Rate Most Since 1998 to Stem Ruble Rout

Russia’s central bank raised its benchmark interest rate the most since the nation’s 1998 default, making the announcement in the middle of the night in Moscow as policy makers seek to douse investor panic and stem a ruble rout.

The central bank increased the key rate to 17 percent from 10.5 percent effective today, it said in a statement on its website. Policy makers gathered for an unscheduled meeting after a one-point increase on Dec. 11.

“This decision is aimed at limiting substantially increased ruble depreciation risks and inflation risks,” the bank said in the statement.

Russia’s central bank raised interest rates for the sixth time in 2014 after more than $80 billion spent from its reserves failed to stop a 49 percent sell off of the ruble, the world’s worst-performing currency this year.

Besides the facts, this Bloomberg story has the usual b.s. Crimea propaganda.  It appeared on their website at 3:27 p.m. MST yesterday afternoon---and I thank Dan Lazicki for bringing it to my attention---and now to yours.  There was another somewhat similar Bloomberg story on this issue---also courtesy of Dan---and it's headlined "Ruble Tumbles Most Since 1998 as Traders Pressure Central Bank".  It's worth reading.

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Revitalized Turkey drifts away from Europe and towards Eurasia

Along with Russia, Turkey lies at the confluence between Europe and Asia. A peripheral European power, like Russia, it is following Moscow's lead and also looking east.

In Turkey, I found a nation of deep contrasts, but a country incredibly sure of its statehood and fastened together by a strong overriding identity. Unlike its Black Sea neighbors, most of whom are searching for a stable course, Turkey is assured and united.

A country without the deep-seated corruption of nearby ‘European’ states and the religious radicalism of its Middle Eastern neighbors, Turkey is back in business. It also has the potential to become the dominant power in its hinterland, if it isn’t already.

Relations between Moscow and Ankara have been making headlines due to a new gas deal which will replace the ill-fated South Stream project. Nevertheless, from a Turkish perspective, warmer relations with Russia are part of a greater pivot to Eurasia. After flirting with Europe for decades and being constantly spurned, Turkey no longer seeks to be an attachment to a failing EU. Indeed, many Turks expressed the view that being rejected by Brussels has turned out to be a lucky escape.

This op-edge commentary showed up on the Russia Today Internet site at 1:19 a.m. Moscow time on their Sunday morning---and it's the second-last offering of the day from Roy Stephens.

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OPEC willing to push oil price to $40 says Gulf oil minister

OPEC's most influential producers are willing to allow oil prices to fall to $40 per barrel before discussing whether the cartel should hold an emergency meeting to discuss cutting output.

According to Suhail al-Mazrouei, energy minister of the United Arab Emirates and a high profile delegate of the cartel: "We are not going to change our minds because the prices went to $60, or to $40."

The official's comments made to Bloomberg News at a conference in Dubai could add to further downward pressure on prices, which have already fallen more than 45pc since June. Brent crude - a global benchmark comprised of high-quality oil from 15 North Sea fields - closed last week at a new five-and-a-half-year low under $62 per barrel.

A slump in prices to levels around $40 per barrel would be a boost for parts of the UK economy and could see petrol prices drop close to £1 per litre providing relief to motorists. However, the slump will also threaten thousands of jobs in Britain's petroleum industry and according to Wood Mackenzie place around £55bn worth of oil projects in the North Sea and Europe at risk of cancellation

As this---and the following story shows---there is a big downside to cheap gas/petrol at the pump.   This article appeared on the Internet site at 11:45 a.m. GMT on Sunday morning---and it's worth reading.  It's also the final offering of the day from Roy Stephens, for which I thank him.

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Crashing crude may blow a $1.6 trillion hole in the global oil sector, annually

Talk about an oil spill. The spectacular unhinging of crude oil prices over the past six months is weighing mightily on the U.S. stock market.

And while it may be too early to abandon all hope that the market will stage a year-end Santa rally, it appears that if Father Christmas comes, there’s a good chance his sleigh will be driven by polar bears, instead of gift-laden reindeer.

Wall Street’s gift: a major stock correction.

Indeed, the Dow Jones Industrial Average DJIA, -0.58%  already endured a bludgeoning, registered its worst percentage decline since Nov. 25, 2011, down 677.96 points, or 3,78%. It was also the worst week for the S&P 500 SPX, -0.63% on a percentage basis since May 18, 2012. The S&P 500 was down 73. 04 points and 3.52% on the week.

But all that carnage is nothing compared to what may be in store for the oil sector as crude oil tumbles to new gut-wrenching lows on an almost daily basis. On the New York Mercantile exchange light, sweet crude oil for January delivery settled at $57.81 on Friday, its lowest settlement since May 15, 2009.

This brief commentary showed up on the Internet site at 9:36 a.m. EST on Sunday morning---and it's the final offering of the day from Dan Lazicki.

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Saudi Arabia is playing chicken with its oil

In August 1973, Egyptian President Anwar Sadat paid a secret visit to the Saudi capital, Riyadh, to meet with King Faisal. Sadat was preparing for war with Israel, and he needed Saudi Arabia to use its most powerful weapon: oil.

Until then, King Faisal had been reluctant for the Arab members of OPEC to use the “oil weapon.” But as the October 1973 Arab-Israeli war unfolded, the Arab oil producers raised prices, cut production and imposed an embargo on oil exports to punish the United States for its support of Israel. Without Saudi Arabia, the oil embargo would not have gotten very far.

Today, Saudi Arabia is once again using its “oil weapon,” but instead of driving up prices and cutting supply, it’s doing the reverse. In the face of a global slide in oil prices since June, the kingdom has refused to cut its production, which would help to drive prices back up. Instead, the Saudis led the charge to prevent OPEC from cutting production at the cartel’s last meeting on Nov 27.

The consequences of Saudi policy are impossible to ignore. After two years of stable prices at around $105 to $110 a barrel, Brent blend, the international benchmark, fell from $112 a barrel in June to around $65 on Friday. “What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. His answer? “To harm Russia.”

That is partially true, but Saudi Arabia’s gambit is more complex.

This commentary appeared on the Reuters website yesterday sometime---and it's definitely worth reading.

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Survey: Chinese manufacturing contracted in December

A survey of Chinese factories says manufacturing activity contracted in December in another sign the slowdown in the world's No. 2 economy is quickening.

HSBC's preliminary purchasing managers' index released Tuesday fell to a seven month low of 49.5 from 50 in November.

The index uses a 100-point scale on which numbers above 50 indicate expansion.

It's the latest in a string of weak data on China's economy, which expanded at a five-year low of 7.3 percent last quarter. That rate was below the official full year target of 7.5 percent.

This short AP story was posted on their website at 9:24 p.m. EST yesterday evening---and I thank West Virginia reader Elliot Simon for sharing it with us.

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Abe's coalition secures big Japan election win with record low turnout

Japanese Prime Minister Shinzo Abe's coalition cruised to a big election win on Sunday, ensuring he will stick to reflationary economic policies and a muscular security stance, but record low turnout pointed to broad dissatisfaction with his performance.

NHK public TV said Abe's Liberal Democratic Party and junior partner the Komeito party were assured more than the 317 seats in the 475-member lower house required to maintain a two-thirds "super-majority" that smooths parliamentary business.

But the LDP was set to fall slightly short of the 295 it held before the poll, NHK figures showed.

"I believe the public approved of two years of our 'Abenomics' policies," Abe said in a televised interview. "But that doesn't mean we can be complacent."

Many voters, doubtful of both the premier's "Abenomics" strategy to end deflation and generate growth and the opposition's ability to do any better, stayed at home.

This Reuters news item, filed from Tokyo, appeared on their website at 11:59 a.m. EST on Monday---and I thank Orlando, Florida reader Dennis Mong for digging it up on our behalf.

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Gold extends drop with silver before fed monetary policy meeting

Gold futures posted the longest slump in five weeks on concern that the Federal Reserve is moving closer to raising U.S. interest rates, crimping demand for the precious metal as an alternative investment.

In the third quarter, gold fell 8.4 percent as the U.S. economy gained. The Fed begins a two-day meeting tomorrow and policy makers will debate the pace of raising borrowing costs after holding its benchmark rate close to zero percent since 2008.

Last month, gold dropped to a four-year low as equities surged to a record and oil prices entered a bear market. Jeffrey Currie, head of commodity research at Goldman Sachs Group Inc, said last week that the metal will drop as the U.S. economy improves. Economists and Fed officials surveyed by Bloomberg expect higher rates in 2015.

“This week will be all about the Fed,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Some investors are waiting on the sidelines until they get a clearer picture from the Fed.”

I picked this Bloomberg story off the Sharps Pixley website at 3:20 a.m. EST on Monday morning, but it's obviously been 'reworked' since then, because along with a 12:55 p.m. MST dateline, it also sports a new headline that reads "Gold Prices Cap Longest Slump in Five Weeks on Fed Rate Outlook".

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2014 silver eagle sales break annual record at over 43 million

Silver Eagle sales in 2014 have already broken the 2013 annual record with a few weeks of sales still left to be counted. As of December 11, the U.S. Mint reported that 43.1 million silver eagles have been sold so far in 2014. This compares to the 42.7 million during all of 2013, which was the previous all-time record.

Investor demand for silver clearly remains strong and people are taking advantage of discount prices. Why not? It isn’t too often that you can purchase an end product for less than the cost to produce it.  Many miners are unprofitable at current silver prices as their all-in cost of production is closer to $20. I believe this is an excellent time to take advantage of the paper games that have pushed prices to such absurd lows. Silver at under $20 per ounce is not likely to last long.

Yes, dear reader, it's another record year for U.S. silver eagles sales which I mentioned in my column last week.  But ignored in this article is the blatant fact that the retail silver investor in silver is M.I,A. for all types of silver bullion---and silver eagles sales this year and last are only a fraction of what they were in 2011 and the first part of 2012.  A phone call to your friendly local bullion dealer will reveal that fact---something that this so-called 'silver analyst' obviously hasn't done.  I'm in a position to talk to some of the biggest bullion wholesalers in North America on a weekly basis---and the story is the same.  It's the one or two big buyers that Ted has been talking about for the last two years now that have vacuuming up all the silver eagles---and silver maple leafs.

As Mark Twain was quoted as saying---"It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."  This is a case in point---along with most of what else you read from the rest of the lunatic fringe.

This silver-related 'story' appeared on the Internet site on Sunday---and it's courtesy of reader M.A.

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Casey Research: Russian Bear—or Gold Bull?

Last week oil was down, emerging markets were down, Wall Street was down—even the US dollar was down… but gold was up. That’s just the latest fluctuation, so, as encouraging as it is for us, we’ll wait for our favorite metal to show some real strength before getting too excited.

Meanwhile, the warm feelings gold bugs were celebrating got doused by news of Russia selling off its gold reserves as a response to its economic difficulties. But is it true?

Fortunately, we have fluent Russian speakers on staff here, so we were able to go to the source, and we’ve got the straight facts for you.

Yet another reminder that there is no substitute for careful thought and due diligence in all business matters.

Late last week several readers sent me this news item about Russia selling some of its gold, but it never appeared in my column because I was informed right away that it was bogus.  This commentary by Casey Research's own Laurynas Vegys appeared in yesterday's edition of the Casey Daily Dispatch---and it's worth reading.

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Johnson Matthey sells Gold and Silver Refining business for £118 million

Johnson Matthey announces that it has agreed to divest its Gold and Silver Refining business to Asahi Holdings, Inc., a collector, refiner and recycler of precious and rare metals from waste materials, for £118 million (US$186 million) in cash, subject to typical post-closing adjustments. The transaction is expected to be completed by the end of March 2015.

Johnson Matthey’s Gold and Silver Refining business is a refiner of primary and secondary gold and silver materials. It serves customers globally from refineries in Salt Lake City, USA and Brampton, Canada. The business also provides investment casting services from its St Catharines facility in Canada. In total, the business employs approximately 340 people.

In the financial year ended 31 March 2014 the Gold and Silver Refining business had sales excluding the value of precious metals (sales) of £44 million and for the six months ended 30 September 2014, its sales were £19 million. Its return on sales is typically around 25%.

This precious metal related story appeared on the Internet site yesterday---and I found it on the Sharps Pixley website.

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Koos Jansen: Why Austria is likely to repatriate its gold from London

Bullion Star market analyst and GATA consultant Koos Jansen writes that the Austrian central bank's gradual reduction of the unallocated portion of its gold reserves at the Bank of England in London indicates that Austria is serious about repatriating its foreign-vaulted gold.

Jansen's commentary is headlined "Why Austria Is Likely to Repatriate Its Gold from London" and it was posted on the Singapore-based Internet site on Saturday---and I found it on the Internet site.

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Swiss gold exports to India near Rs 1 trillion in 2014

Amid concerns of bullion trade being used for routing of black money, Switzerland's gold exports to India have risen further and is fast approaching Rs 1 trillion mark for the entire 2014.

The Swiss gold exports to India stood at over 2.8 billion Swiss francs (over Rs 18,000 crore) in October, up from about 2.2 billion Swiss francs in the previous month, shows the latest data from the Swiss Customs Administration.

This has taken the total Swiss gold exports to India since January this year to 14.2 billion Swiss francs (nearly Rs 93,000 crore), as per the data compiled by Switzerland's cross-border trade monitoring agency.

This surge in gold shipments has made India the largest destination for the yellow metal exports from Switzerland.

This longish article, co-filed from Berne and New Delhi, showed up on The Times of India website at 7:34 p.m. IST on their Sunday evening---and it's courtesy of Manitoba reader U.M.  It's worth reading.

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Indian gold imports in November close to 150 tonnes

India’s imports of gold surged in November to 145-150 tonnes, according to the latest statistics from the Indian Ministry of Commerce and Industry.

The ministry valued gold imports last month at $5.6 billion, which at the average spot price of $1,177 per ounce equates to around 148 tonnes. Imports hit 150 tonnes in October after 120-130 tonnes in September, 71 tonnes in August and 48 tonnes in July, when importers stepped up their efforts to meet the typical increase in demand from the Hindu festival season.

Imports surged on news that the Reserve Bank of India was reviewing import curbs that were introduced last year to counteract the country’s ballooning current account deficit. Towards the end of November, however, the RBI surprised markets by abolishing the rule that made it mandatory to export 20 percent of all imported gold, known as the 80:20 rule.

This short article appeared on the website at 2:50 p.m. GMT yesterday---and it's another gold-related news item I found on the Sharps Pixley Internet site.  It's a must read.

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3 Kerala companies have more gold than Sweden, Singapore, Australia

Three gold loan companies in Kerala have more precious metal in their vaults than the gold reserves of some of the richest nations. Muthoot Finance, Manappuram Finance and Muthoot Fincorp jointly hold nearly 200 tonnes of gold jewellery, which is higher than the gold reserves of Singapore, Sweden or Australia.

India accounts for approximately 30% of the global demand for gold, a true-and-tested source of insurance for millions of families that have little access to other forms of social security. What is true for India is even more so for Kerala, where 2 lakh people are employed in the gold industry. The metal's fungibility makes it an ideal collateral for over-the-counter loans.

Muthoot Finance holds 116 tonnes of gold as security for its loans, Manappuram Finance has 40 tonnes and Muthoot Fincorp, 39 tonnes. The trio's combined holdings are 195 tonnes. To put things in global perspective, Singapore's gold reserves are 127 tonnes, Sweden's 126 tonnes, South Africa's 125 tonnes and Mexico's 123 tonnes.

This gold-related article, filed from Kochi, was posted on The Times of India website at 2:06 a.m. India Standard Time [IST] on Sunday.  It's another contribution from reader U.M.

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'Dama' investors suffer heavy blow as gold frenzy subsides

Jewelry shops in Shuibei in Shenzhen's Lohu district have seen a drastic reduction in custom, as the local gold market is experiencing a chill, similar to the cold front sweeping the region.

Local jewelry shops report that their sales have plunged 40%-50% this year, according to Chinese-language Shanghai Securities News.

The status of jewelry vendors in Shuibei mirrors the situation of China's gold and jewelry market as a whole, as the region is the largest jewelry trading center in the nation, boasting four large-scale jewelry wholesale marketplaces and 4,000 jewelry firms, on top of over 2,000 small businesses, employing over 130,000 people, forming a complete industrial chain which covers processing, production, management, wholesale and retail.

Shuibei racks up jewelry processing value of 80 billion yuan (US$12.9 billion) a year, for a nationwide market share of just over 70%, accounting for 80%-90% of the nation's total transaction volume in gold/platinum and jewels.

Zhao Bin, general manager of a local jewelry company, said that the company's sales of gold-related products have slumped 60% this year, notably investment-oriented products, such as gold coins and gold bars, according to Shanghai Securities News.

This story put in an appearance on the Internet site at 9:04 a.m. Beijing time on their Monday morning---and it's the final offering of the day from reader U.M., for which I thank her.

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Robert Ringer: Dollar Collapse Is Inevitable, So Buy Gold

Last month, Kitco News interviewed renowned New York Times Bestselling author Robert Ringer. They began by discussing the current political direction of America, but moved on to the collapse of the dollar. While Ringer will not put a timeline on the collapse of America’s currency, he is certain that it will fall apart.

What will that collapse look like? Again, Ringer wouldn’t say, but he does have just one piece of advice for everyone: buy gold. Buy physical gold. In fact, he is even more aggressive in his allocation than our Chairman Peter Schiff. Ringer believes 50% of your portfolio should be in gold!

I found this gold-related news item on The Telegraph's Finance webpage late last night when I was looking for something else.  The link led to the Internet site.  There's a 6:12 video clip, plus a transcript.

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Dec 13, 2014

Wall Street’s Win on Swaps Rule Shows Washington Resurgence

Wall Street is re-emerging as a force in Washington as it closes in on one of its biggest wins against regulation since the financial crisis.

With must-pass spending legislation making its way through Congress this week, banks seized on an opportunity to attach a measure that would halt a planned restriction on derivatives trading they had long opposed. The industry’s lobbying extended to the highest levels of finance with JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon pressing lawmakers to support the change.

Wall Street’s success, after four years of struggling to persuade Congress to ease the Dodd-Frank Act, is a precursor to more fights next year against some of the law’s hallmarks: the consumer protection bureau and stiff oversight of big financial companies whose failure could threaten the financial system.

“The Wall Street interests -- the big banks -- they’re back,” said Richard Durbin of Illinois, the Senate’s second-ranking Democrat.

This Bloomberg news item appeared on their Internet site at 11:01 a.m. Denver time yesterday morning---and I thank West Virginia reader Elliot Simon for today's first story.

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Some Accused of Insider Trading May Rethink Their Guilty Pleas

A ruling that tossed out the insider trading convictions of two hedge fund managers may have opened the door for others charged with wrongful trading to get their cases or pleas dismissed.

A federal judge in Manhattan, Andrew L. Carter Jr., on Thursday ordered the lawyers for the defendants in an unrelated insider trading case to come to court on Dec. 18 to discuss the implications of the ruling. The day before, a panel of the United States Court of Appeals for the Second Circuit overturned the convictions of the hedge fund managers Anthony Chiasson and Todd Newman.

Judge Carter said in his brief order that he wanted to discuss whether the appellate ruling affects a guilty plea by at least one of five defendants. In the case he is overseeing, five friends have been accused of receiving a secondhand tip about IBM’s plans to acquire SPSS for $1.2 billion in October 2009.

The move by the judge is a sign that the impact of the appellate court’s decision may have ramifications well beyond Mr. Chiasson and Mr. Newman. The ruling was notable because the appellate court significantly reined in prosecutors when pursuing cases of insider trading, especially against individuals who are far removed from the original source of an illegal stock tip.

This article appeared on The New York Times website at 9:11 p.m. EST on Thursday evening---and it's the first offering of the day from Roy Stephens.

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Jim Rickards: Fairy tales from the Federal Reserve: 15 Reasons Fed Policies Belong in Fantasyland

Don’t ever think for a minute that the central bankers know what they’re doing. They don’t. And that’s my own view, but I’ve heard that recently from a couple central bankers. I recently had spent some time with one member of the FOMC, the Federal Open Market Committee, and another member of the Monetary Policy Committee of the Bank of England, which is the equivalent of their FOMC, both policymakers, both central bankers.

And they said the same thing, “We don’t know what we’re doing. This is a massive experiment. We’ve never done this before. We try something. If it works, maybe we do a little more; if it doesn’t work, we pull it away, and we’ll try something else.” And the evidence of this – again, I’ve heard this firsthand, and it’s my view – but the evidence for this is that their have been 15 separate fed policies in the last 5 years.

This 3:26 minute video clip, plus transcript, showed up on the Internet site on Thursday---and I thank Dan Lazicki for sharing it with us.

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John Pilger: War by media and the triumph of propaganda

Why has so much journalism succumbed to propaganda? Why are censorship and distortion standard practice? Why is the BBC so often a mouthpiece of rapacious power? Why do The New York Times and The Washington Post deceive their readers?

Why are young journalists not taught to understand media agendas and to challenge the high claims and low purpose of fake objectivity? And why are they not taught that the essence of so much of what's called the mainstream media is not information, but power?

These are urgent questions. The world is facing the prospect of major war, perhaps nuclear war - with the United States clearly determined to isolate and provoke Russia and eventually China. This truth is being turned upside down and inside out by journalists, including those who promoted the lies that led to the bloodbath in Iraq in 2003.

The times we live in are so dangerous and so distorted in public perception that propaganda is no longer, as Edward Bernays called it, an "invisible government". It is the government. It rules directly without fear of contradiction and its principal aim is the conquest of us: our sense of the world, our ability to separate truth from lies.

This essay was posted on the Internet site on December 5---and it's certainly worth reading if you have the time.  I thank reader D'Anne Blume for sending it our way last Sunday.

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U.K. stocks suffer worst weekly rout since 2011 on economy fears

The FTSE 100 suffered its worst week for more than three years, with more than £100bn wiped off the value of Britain’s biggest companies after investors took fright at signs of a Chinese slowdown, the oil rout and looming elections in Greece, plunging global stock markets into turmoil.

London’s benchmark index on Friday slumped 161.07 points to 6,300.63, a 2.5pc tumble that brought its drop since the open of trade on Monday to 6.6pc. The FTSE 100 fell every day this week.

The slide marked the heaviest weekly fall since August 2011 and knocked £112bn off the value of the index. Today alone saw the FTSE 100 lose almost £41bn, as bourses around the world all plunged. Germany’s DAX y lost 2.7pc, the CAC 40 in France dropped 2.8pc and the Italian FTSE MIB slid 3.1pc. On Wall Street, the Dow Jones Industrial Average had lost almost 200 points by the time trading in London had finished.

Globally, more than $1 trillion was wiped from equities this week, while the VIX index, a U.S. measure of volatility, rose 70pc.

This story appeared on The Telegraph's website at 6:15 p.m. GMT Friday evening---and I found it all by myself.

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France drifts into deflation as ECB 'pea-shooter' falls short

France is sliding into a deflationary vortex as manufacturers slash prices to keep market share, intensifying pressure on the European Central Bank to take drastic action before it is too late.

The French statistics agency INSEE said core inflation fell to -0.2pc in November from a year earlier, the first time it has turned negative since modern data began.

The measure strips out energy costs and is designed to “observe deeper trends” in the economy. The price goes far beyond falling oil costs and is the clearest evidence to date that the eurozone’s second biggest economy is succumbing to powerful deflationary forces.

Headline inflation is still 0.3pc but is expected to plummet over the next three months. French broker Natixis said all key measures were likely to be negative by early next year.

This commentary by Ambrose Evans-Pritchard put in an appearance on the Internet site at 8:14 p.m. GMT on Thursday evening---and it's the second offering of the day from Roy Stephens.

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Fitch Downgrades France to AA

Fitch Ratings has downgraded France's Long-term foreign and local currency Issuer Default Ratings (IDR) to 'AA' from 'AA+'. This resolves the Rating Watch Negative (RWN) placed on France's ratings on 14 October 2014. The Outlooks on France's Long-term ratings are now Stable. The issue ratings on France's unsecured foreign and local currency bonds have also been downgraded to 'AA' from 'AA+' and removed from RWN. At the same time, Fitch has affirmed the Short-term foreign currency IDR at 'F1+' and the Country Ceiling at 'AAA'.

In its debt sensitivity analysis, Fitch assumes a primary surplus averaging 0.5% of GDP over the next 10 years, trend real GDP growth averaging 1.5%, an average effective interest rate of 2.7% and GDP deflator of 1.5%. On the basis of these assumptions, the debt-to-GDP ratio would peak at 99.4% in 2017, before declining to 87.6% by 2023.

Fitch assumes the eurozone will avoid long-lasting deflation, such as that experienced by Japan from the 1990s. Fitch also assumes the gradual progress in deepening fiscal and financial integration at the eurozone level will continue; key macroeconomic imbalances within the currency union will be slowly unwound; and eurozone governments will tighten fiscal policy over the medium term.

What are these guys smoking?  How about junk status?  That's what France's bonds should really be rated at---along with just about every other country's bonds as well.  This Zero Hedge posting appeared on their Internet site at 4:13 p.m. EST yesterday afternoon---and I thank Elliot Simon for passing it around.

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‘We want our jobs!’ Thousands march against Italian labor reforms

Some 40,000 protesters took to the streets of Rome on Friday, as Italy was gripped by protests against Prime Minister Matteo Renzi's reforms. Demonstrations turned violent in Milan and Turin as protesters clashed with police.

A general strike called by CGIL and UIL, two of Italy’s major trade unions, prompted huge rallies in over 50 cities nationwide. The unions have denounced government reforms, claiming they pose a threat to job security.

Strikers believe the burden of reform is being placed unfairly on workers.

Renzi has defended the reform program, saying that Italy, which is in the midst of a three-year recession – the longest since WWII – needs mobility of labor in order to jump-start the economy. Protestors, however, disagree. Thousands marched under the banner “Cosi non va!,” which roughly translates to “This is unacceptable!”

This news story showed up on the Russia Today website at 9:22 p.m. Moscow time on their Friday evening, which was 1:22 p.m. in New York.

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Greek Stock Rout Means ASE Is 2014 Worst After Russia

Anxiety that voters will kick out leaders committed to Greece’s bailout wreaked havoc on markets, sending the nation’s shares for the biggest weekly slump since 1987 and making them this year’s worst performers behind Russia.

The ASE Index (ASE) has lost 20 percent this week, taking its decline for the year to 29 percent. Only Russia’s RTS Index did worse, with a 44 percent plunge. The rout spread to Greek bonds, with rates on three- and five-year notes jumping yesterday to the highest levels since the 2012 debt restructuring.

Greece’s government said this week it would start the process of electing a new president early. The risk is that Prime Minister Antonis Samaras will have to call a parliamentary election that anti-bailout party Syriza might win, reintroducing the turmoil that threatened the European currency union two years ago. Syriza wants a write-down on Greek debt held by euro-area member states and the European Central Bank.

This Bloomberg item, filed from London, appeared on their website at 7:36 a.m. Mountain Time yesterday morning---and I thank reader M.A. for sending it.

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Russia targets Cyprus, Hungary, and Italy for sanctions veto

Moscow has begun lobbying what it sees as sympathetic EU capitals - Budapest, Nicosia, and Rome - to veto next year's renewal of Russia sanctions.

The first batch of E.U. measures - an asset freeze on Ukraine’s former president Viktor Yanukovych (now hiding in Russia) and 17 associates - expires in March. The next batch - visa bans and asset freezes on Russian officials linked to Russia's annexation of Crimea - ends in April.

The most painful sanctions - on Russian banks and energy firms, imposed after the Malaysian Airlines disaster - end in July.

Member states must agree by consensus to extend their validity---but if one or more of them break ranks, the sanctions will fall.

This article, filed from Brussels, appeared on the Internet site at 9:57 p.m. Europe time on Thursday evening---and it's another contribution from Roy Stephens.

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John Batchelor Interviews Stephen F. Cohen about Russia, the Ukraine and Europe

Obama states that Russia is being isolated in the world but the reality seems to be that the rift between the E.U. and Washington is growing and Russia has simply changed course. Although Stephen Cohen does not discuss it, the bell may be tolling for Merkel's political future as that soon to be famous Letter of the 60 is a stern warning that better minds do not like Germany's course against Russia.  The point is that the E.U. is also being isolated from Russia - and Putin has continually stated that his actions with pipelines, trade and associations with China and other BRICKS nations makes this course inevitable. All too true.

Meanwhile there are glimmers of moderation now being heard in the United States. The Booker Institute authors have come out against Washington extremism which it considers dangerous and on a war footing. Cohen again hints about incompetency and dishonesty in the White House.

Cohen also postulates that Ukraine during these upheavals may actually disintegrate as it pushes for war and neglects its obligations to its own citizens in the West.

This very interesting audio interview was posted on the Internet site on Tuesday---and I thank Larry Galearis for sending it along.

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Ukraine cheers U.S. vote for military aid, Russia outraged

Ukraine welcomed a U.S. bill that would allow Washington to provide lethal military assistance to the embattled country, but Russia expressed outrage at the "openly confrontational" legislation.

The bill -- passed late on Thursday and due to get final approval in Congress on Friday before being sent to U.S. President Barack Obama -- opens the way for up to $350 million (280 million euros') worth of U.S. military hardware to be sent to Ukraine, which has been fighting an eight-month war against Kremlin-backed separatists in its east.

It also threatens fresh sanctions against Russia, whose economy is crumbling under previous rounds of Western sanctions and a collapse in oil prices.

U.S. Secretary of State John Kerry is set to meet Russian Foreign Minister Sergei Lavrov in Rome on Monday amid the toughening American response.

Russia's foreign ministry said the new U.S. legislation put a "powerful bomb" under U.S.-Russia bilateral ties.

IF the president signs this bill, it will really up the ante a lot.  This AFP news item, filed from Kiev, appeared on the Internet site  yesterday evening EST---and I thank Jim Skinner for digging it up for us.

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World Oil Demand Outlook Cut Again; Sub-$60 Price Seen Holding

Any hope that global demand would provide a floor for oil’s free fall was dashed as the leading energy forecaster cut its outlook for the fourth time in five months and crude extended its tumble.

Oil dropped 3.6 percent in New York after the International Energy Agency forecast weaker consumption next year and said supply from countries outside of the Organization of Petroleum Exporting Countries will rise faster than previously estimated.

This year’s 41 percent drop in crude has hurt the economies of oil-producing countries from Russia to Nigeria, reducing fuel demand. Brent crude is too low for 10 of OPEC’s 12 members to balance their budgets, yet not low enough to force producers to scale back output. The U.S. is producing the most oil in three decades and OPEC members have pumped more than the group’s target level for each of the past six months.

This very interesting Bloomberg news item, filed from London, appeared on their Internet site at 2:47 p.m. Denver time on Friday afternoon---and it's the second contribution of the day from reader M.A.

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The Oil Market Actually Works, And That Hurts

It’s not about where WTI and Brent are at any given moment. Even if WTI is down another 3.60% today so far at $57.79. Whatever WTI tells us, the real world out there trumps it by a mile and a half. The prices at which oil actually sells in the real world are way below WTO and Brent standards, a very big and scary development. There are tons of parties that will sell at any price they can get. There is no better way to drive prices down further, it’s a vicious circle down a drain.

The market is setting future prices as we go along, that’s the – inevitable – mechanism. It’s called price discovery. We knew ISIS was selling at $30 or so, but tar sands at $30 and both Canada and Venezuela heavy crude at $40, that’s way more than an outlier. At WTI standard prices, too many can’t move nearly enough product anymore, and with credit having been slashed, moving product is the sole way to survive. How much of this ongoing process would you think we have we seen to date?

Here’s one of the first oil-producing countries about which serious alarm bells are raised. It’s not Venezuela or Nigeria, it’s Canada.

This short must read commentary appeared on Internet site yesterday---and my thanks go out to Dan Lazicki for finding it for us.

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Russia sees promise in energy ties with India

Bilateral efforts to expand cooperation in the oil and gas sector between Russia and India hold "great promise," the Kremlin said Thursday.

"We are paving the way for long-term, true and mutually beneficial cooperation," Russian President Vladimir Putin said during a state visit to New Delhi.

Russia is examining its energy options as Western sanctions take their toll on its economy. In July, Russian Ambassador to India Alexander Kadakin told Indian business newspaper The Hindu the Kremlin was interested in spending as much as $40 billion to build a natural gas pipeline for India.

The pipeline would run along the southern border of Russian to India through the Himalayan region or mirror the route of the planned pipeline from Turkmenistan.

This short news item, filed from New Delhi, was posted on the UPI website, at 8:37 a.m. EST on Thursday evening---and it's another contribution from Roy Stephens.

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20 deals in 24 hours: Russia-India relations given $100 billion-worth boost

The economic burden of Western sanctions has pushed Russia to the east in search of business opportunities. Judging by the outcome of President Putin’s visit to India - 20 high-profile deals struck – Moscow’s ‘pivot to Asia’ is getting a warm welcome.

Russian President Vladimir Putin achieved this during his visit to India spanning 23 hours and 15 minutes and at a summit meeting with Indian Prime Minister Narendra Modi that lasted barely a few hours.

By the time the two leaders finished their business in New Delhi’s Hyderabad House, 20 pacts were signed in the presence of Putin and Modi on 11 December and the two sides ended with US$100 billion commercial contracts.

Rich pickings by both sides included deals worth $40 billion in nuclear energy, $50 billion in crude oil and gas and $10 billion in a host of other sectors, including defense, fertilizers, space, and diamonds.

This op-edge piece showed up on the Russia Today Internet site at 12:07 p.m. Moscow time on Friday---and the stories from Roy just keep on coming.

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Generations of Victims: Bhopal's Unending Catastrophe

Thirty years after the worst chemical accident in history, the disaster is hitting a new generation. The victims have received little help, professional clean-up has not happened and there are no signs the ongoing environmental catastrophe will end.

"The people can't see, smell or taste the poison," says Rachna Dhingra, "but it's there." It's in the water, in the flesh of fish and in the milk of the water buffalo, and it's in the dark mud that slum residents scrape from the shores of the lake to fill the cracks in their houses. Dhingra, 37, is standing on a small hill in her blue kurta, a long traditional Indian garment, angrily trying to talk sense into the fishermen. "This is suicide," she shouts.

Today's lake was once used as a solar evaporation pond, a dump for the unfiltered waste from the nearby chemical plant. More than 11,000 tons of material was dumped there, and now the soil and groundwater are contaminated with mercury, nickel and other heavy metals. Nevertheless, farmers water their animals at the lake every day, and women fetch water from it to wash their children and their laundry. The contaminated lake affects more than half a million people. For activist Dhingra, what is happening in Bhopal is an "endless catastrophe -- and the world simply looks away."

The murky lake is only about 500 meters (1,640 feet) from the grounds of the former Union Carbide plant. The rusty factory ruins form a backdrop to the corrugated metal roofs of the slum, almost a memorial. They are silent witnesses of the tragedy that began in Bhopal 30 years ago and continues today.

This 2-page essay appeared on the German website on Tuesday---and was another article because of content and length reasons that had to wait for my Saturday column.  I thank Roy Stephens once again for sending it.

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The Curse Of Keynesian Dogma: Japan’s Lemmings March Toward The Cliff Chanting “Abenomics”

According to Takahiro Mitani, trashing your currency, destroying your bond market and gutting the real wages of domestic citizens is a sure fire ticket to economic success. Yes, that’s what the man says---“I have no doubt that the economy is in a recovery trend if you look at the long run….”

After two years of hoopla and running the BOJ’s printing presses red hot, however, there is not a shred of evidence that Abenomics will lead to any such thing. In fact, after the recent markdown of Q3 GDP even deeper into negative territory, Japan’s real GDP is no higher now than it was the day Abenomics was launched in early 2013; and, in fact, is no higher than it was on the eve of the global financial crisis way back in 2007.

This longish commentary by David Stockman is certainly worth reading---and I thank Roy Stephens once again for sharing it with us.

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"More Scarecrows Than People": A Tragic Preview Of Japan's Terminal Collapse

A few weeks ago it was revealed that the mystery person behind the latest bout of monetary (if not so much fiscal) insanity in Japan is none other than Paul Krugman, a fact which has since assured the fate of Japan as a failed state: the demographically imploding country now has at best a few years (if not less) before it implodes into a hyper-inflationary supernova.

And for a very graphic, and tragic, preview of Japan's endgame - the direct result of following Keynesian and monetarist policies to a tee - we go to the Associated Press, which looks at the village of Nagoro, located "deep in the rugged mountains of southern Japan once was home to hundreds of families" and finds that now, only 35 people remain, outnumbered three-to-one by scarecrows that Tsukimi Ayano crafted to help fill the days and replace neighbors who died or moved away.

Wow!  An absolute must read if there ever was one!  I've known for more than a decade that this was Japan's future, but this AP story from Monday was like a two by four right between the eyes.  The story is courtesy of Manitoba reader U.M., who sent it to me earlier this week---and I stole the introductory paragraphs---and the headline---from the Zero Hedge piece about it.

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Doug Noland: The Collapsing Periphery

This week saw things take a turn for the worse for the Faltering Periphery Bubble. On the back of crude oil’s $8.03 collapse (to five-year lows), Venezuela CDS surged another 1,402 bps to 4,151 bps. Ukrainian bond yields surged 517 bps this week to 28.63%. Russian ruble yields jumped another 95 bps to 12.82%. On the currency front, the Russian ruble was slammed for another 9.25% (down 43.6% y-t-d). The Colombian peso fell 3.7%, the South African rand 2.1%, Indonesia rupiah 1.4%, Chilean peso 1.1% and Indian rupee declined 0.8%. The Chinese renminbi declined a not insignificant 0.6% against the dollar this week.

Importantly, the Periphery’s core has fallen under major duress. The Mexican peso was hit for 2.7% (down 11.7%) this week, with the Brazilian real down 2.5% (down 11%) and the Turkish lira 1.7% (down 6.5%). Brazilian CDS surged 48 bps to a one-year high 212 bps. Mexican CDS jumped 22 bps to a one-year high 112 bps. Brazilian stocks sank 7.7%. Turkey CDS rose 36 bps to 185 (high since October). Indonesian rupiah yields jumped 34 bps to 8.11%.

With Emerging Market currencies faltering, local currency denominated debt has been under pressure. Yet, for the most part, dollar-denominated EM debt has performed well – that is, until this week. Importantly, the EM dollar-denominated bond dam gave way. Russia dollar bond yields surged 59 bps to 6.62%. Brazil yields jumped 47 bps to 4.56%. Turkey yields rose 45 bps to 4.45%; Mexico 18 bps to 3.53%; Peru 22 bps to 3.80%; and Colombia 28 bps to 3.94%. Venezuela dollar-denominated yields jumped 381 bps this week to 24.28%.

It is also fundamental to my current analysis that central bank reflationary measures have rapidly lost their capacity to hold the global Bubble together---and that the game would continue.  The game, however, has changed. Flagrant euro and yen devaluation propelled king dollar, in the process giving a powerful bear hug to already deflating Periphery Bubbles. King dollar placed further downside pressure on crude and commodities markets. Collapsing crude and commodities impaired financial and economic stability for scores of countries and companies – too many that had ballooned debt (much dollar-denominated) throughout the previous boom. Huge amounts of global debt have rather suddenly turned suspect, inciting a self-reinforcing flight out of currencies, debt markets and commodities. And the more flows reverse out of the Periphery and head to the bubbling Core, the more destabilizing the unfolding king dollar dynamic for the global financial “system” and economy.

With each passing week, Doug Noland's Credit Bubble Bulletin becomes all the more crucial to the understanding of the credit dynamic that now blankets Planet Earth.  As always, it's a must read from one end to the other---and I thank reader U.D. for passing it around last night before I got around to digging it up myself.

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Chris Martenson interviews Mike Maloney about the Coming Wealth Transfer

Chris Martenson: Well it’s global this time, right? This is -- there’s nowhere to hide. (...)  What has happened when we’ve tried to print our way to prosperity before? What has happened? Why has it happened and what have been the consequences always been?

Mike Maloney: Whenever you try to print your way to prosperity it transfers well from the masses to the few. The few being the people running the game and then also the hucksters that are very nimble, the con artists and so on. You see these people get rich during the Weimar Hyperinflation. There were quite a few of these fancy salespeople that got rich; they didn’t stay rich once things stabilized again.

But it creates such a topsy turvy world that the normal person that does not know how to operate under these weird economic conditions cannot possibly keep up with things and wealth is transferred away from those people to the people that are very good at observing what’s going on that second and adjusting to it. But the one thing that I see as a constant throughout history is that gold and silver eventually do an accounting of all this -- the financial -- you know financial finessing that the governments are doing.

And when it does that it -- there is a transfer of wealth to the people that own gold and silver. And so -- it’s very rare moments in history. This does not happen often. But it’s a great opportunity and I’ve just -- you know if you look at gold right now the public’s opinion of gold is quite low because it’s been going down for three years.

This 43:35 minute audio interview [with transcript] showed up on Chris Martenson's Internet site last Saturday, but for obvious length reasons, it had to wait for today's column.  It's worth your time, if you have any left, that is---and I thank reader John Bastian for passing it around last Sunday.

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Peter Boehringer explains the German gold repatriation campaign

In an interview with Rick Wiles of Tru News, Peter Boehringer of the German Precious Metals Society, a leader of the campaign to induce the Bundesbank to repatriate Germany's gold reserves, describes the campaign and the central bank's longstanding reluctance to provide information about the metal.

The interview, which was recorded on Thursday, begins at the 16-minute mark on the Internet site.  Chris Powell filed this GATA release from Munich early Friday afternoon local time.

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Austria Considers Repatriating Its Gold

And just like that, the list of countries who want to repatriate their gold just increased by one more, because after Venezuela, Germany, the Netherlands, sorry Switzerland, and rumors of Belgium, we now can add Austria to those nations for whom the "6,000 year old barbarous relic bubble" is more than just "tradition."

From Bloomberg: Austrian Central Bank Mulls Relocating London Gold: Standard

The Austrian state audit court says central bank should address concentration risk of storing 80% of its gold reserves with the Bank of England, Standard reports, citing draft audit report. Court advises central bank to diversify storage locations, contract partners.

Austrian central bank reviewing gold storage concept, doesn’t rule out relocating some of its gold from London to Austria: Standard cites unidentified central bank officials. Austria has 280 tons gold reserves, according to 2013 annual report. Austrian Audit Court Will Review Nation’s Gold Reserves.

This Zero Hedge gold-related story is one I found embedded in a GATA release that Chris Powell filed from Toronto just before midnight EST last night.

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Koos Jansen: Shanghai Gold Exchange chief's data disputes WGC's China demand estimates

Data from the chairman of the Shanghai Gold Exchange shows that the World Gold Council's estimates of China's gold demand are very understated, Bullion Star market analyst and GATA consultant Koos Jansen reports.

This commentary by Koos showed up on the Singapore-based Internet site yesterday sometime---and I found this story that Chris Powell filed on the Internet site just after midnight EST last night.

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Dec 12, 2014

Debt Is Forever in 21st Century America

Nearly one in five Americans expect to be in debt the rest of their lives and never pay off what they owe, according to a new survey.

Specifically, 18 percent of the 1,001 respondents don't believe they will ever get out of debt – double the percentage who said that less than two years ago, in May 2013.

While mortgage delinquencies have declined recently, credit card debt is going back up and student loan debt has been on the rise in recent years, CNBC reported.

Older respondents were more apt to believe their debt would never get paid off. Approximately 31 percent of those older than 65 expected to be lifelong debtors, versus 22 percent of those aged 50 to 64 and just 6 percent of millennials aged 18 to 29.

Today's first news item appeared on the Internet site at 7:40 a.m. EST on Thursday morning---and it's courtesy of West Virginia reader Elliot Simon.

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Langone: 'Consumers More Cautious Now Than I've Ever Seen'

Many analysts are growing increasingly optimistic about the U.S. economy, in light of recent data such as the 321,000 surge in November non-farm payroll employment. 

But Home Depot co-founder Ken Langone is more circumspect, especially when it comes to the consumer sector. "The consumer is more cautious now than I've ever seen them," he told CNBC

Stagnant income remains a problem for many Americans, Langone notes. Average hourly wages rose only 2.1 percent in the 12 months through November, barely exceeding the 1.7 percent increase in consumer prices in the 12 months through October.

"We have to do something to get the lower-income people to the party. It isn't just jobs. It's pay," Langone said.

This story showed up on the Internet site at 8:00 a.m. EST yesterday---and it's the second contribution in a row from Elliot Simon.

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Bill Bonner: The "Near-Bubble"

The Dow fell 51 points on Monday. Gold surged $37.10 – or 3.1% – to settle at $1,232 an ounce. The US stock market is “hideously expensive,” says value investor James Montier at Boston-based investment firm GMO.

He’s not wrong about that. But we have a feeling it’s going to be even more hideous before this story reaches its end. When it is so hideous that to look upon it sends us running to a public toilet and retching, that is when it will be most loved by everyone.

This is the story of human hubris (a classic in Greek drama), wherein man oversteps his boundaries and brings down upon himself the fury of wrathful gods.

Yellen, Draghi, Kuroda, Carney, Zhou – the protagonists think they are “wiser than God.”

This short commentary, with two excellent charts, was posted on the Internet site yesterday---and it's courtesy of Dan Lazicki.

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Fed Bubble Bursts in $550 Billion of Energy Debt: Credit Markets

The danger of stimulus-induced bubbles is starting to play out in the market for energy-company debt.

Since early 2010, energy producers have raised $550 billion of new bonds and loans as the Federal Reserve held borrowing costs near zero, according to Deutsche Bank AG. With oil prices plunging, investors are questioning the ability of some issuers to meet their debt obligations. Research firm CreditSights Inc. predicts the default rate for energy junk bonds will double to eight percent next year.

“Anything that becomes a mania -- it ends badly,” said Tim Gramatovich, who helps manage more than $800 million as chief investment officer of Santa Barbara, California-based Peritus Asset Management. “And this is a mania.”

The Fed’s decision to keep benchmark interest rates at record lows for six years has encouraged investors to funnel cash into speculative-grade securities to generate returns, raising concern that risks were being overlooked. A report from Moody’s Investors Service this week found that investor protections in corporate debt are at an all-time low, while average yields on junk bonds were recently lower than what investment-grade companies were paying before the credit crisis.

This Bloomberg article, filed from New York, showed up on their Internet site at 8:59 a.m. Denver time yesterday morning---and it's the second offering in a row from Dan Lazicki.

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Bank of Canada: Housing may be overvalued by as much as 30 per cent

The Bank of Canada is suggesting house prices may be overvalued by as much as 30 per cent, but governor Stephen Poloz maintains the country’s real-estate market is still likely headed for a soft landing.

Even with the risk of overvalued homes, the central bank governor reiterated his forecast Wednesday that the market will unwind gradually along with the improving economy.

“We believe the economy is gathering strength, it’s beginning to rebuild itself, it’s going to create new jobs and income is going to go up,” Poloz told a news conference after releasing the review.

Gathering strength?  Methinks not.  More like whistling past the graveyard.  This CP article, filed from Ottawa, appeared on the website on Wednesday---and I thank Brad Robertson for his second contribution in a row.

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Governor Mark Carney Sweeps Aside Secrecy at Bank of England

Mark Carney, Bank of England governor, swept aside much of the secrecy that traditionally surrounds the central bank's deliberations on Thursday, promising to publish voting details and minutes of interest rate decisions at the same time they are announced.

The bank also wants to hold fewer monetary policy meetings each year and, after reviewing its practice of deleting recordings, has decided it will publish transcripts of monetary policy meetings after a delay of eight years.

The key word here is in the first sentence---and that is "much".  What is missing is the implied "but not all" portion, as I'm sure they're not about to discuss their gold secrets.

The above two paragraphs are all there is that's posted in the clear from this story that appeared in the Financial Times of London yesterday---and the rest is subscriber protected.  I found it in a GATA release that Chris Powell filed from Munich yesterday afternoon Europe time.

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Norway Risks ‘Severe Downturn,’ Central Bank Governor Says

The governor of Norway’s central bank says western Europe’s biggest oil producer is facing a major economic slowdown as crude prices continue to plunge.

“Our job now is that we need to prevent a severe downturn in the economy,” Oeystein Olsen said today in an interview after a press conference in Oslo. “Overall, that is presently the major concern of the board. That explains why we have reduced the rate.”

Olsen cut Norway’s main interest rate today by 0.25 percentage point to 1.25 percent, a move that shocked markets and sent the krone down almost 2 percent against the euro. The decision came after almost three years of unchanged rates and marked a shift away from a policy that had sought to prevent excessive monetary easing from fueling house price growth.

The krone plunged as much as 1.8 percent against the euro and traded 1.1 percent lower at 9.0138 as of 10:56 a.m. in Oslo.

This Bloomberg article, filed from Oslo, showed up on their website at 6:50 a.m. MST yesterday morning---and it's another offering from Elliot Simon, for which I thank him.

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Deutsche, Barclays FX Algos Busted For FX Rigging

First it was humans. Now it is vacuum tubes.

Having quickly learned that letting carbon-based traders engage in FX (or stock, or bond, or Libor, but not gold, never gold) rigging usually leads to said carbon-trader ultimately being fired with the bank suffering a violent slap on the wrist, banks are getting smart, and have - as we have been claiming for about 4 years - decided to let pre-programmed algos do all the market manipulation. Only this time it is not some tinfoil blog making this accusation, but New York regulators who according to Bloomberg, have found evidence that Barclays Deutsche Bank may have used algorithms on their trading platforms to manipulate foreign-exchange rates, a person with knowledge of the investigation said.

As Bloomberg reports, the practice suggests there may be a systemic problem involving automated tools that goes beyond individuals colluding to rig currency benchmarks and take advantage of less sophisticated clients.

Whatever tipped them off: was it looking at any given Yen cross for about a minute and seeing the now surreal stop hunts that take place on a constant basis as algos out rig each other in attempts to pick the pockets of any human fools who still think they have a chance in yet another rigged, manipulated market.

This must read Zero Hedge commentary, along with the linked Bloomberg article, appeared on their website at 8:01 a.m. EST yesterday---and it was embedded in another GATA release from yesterday.

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Marin Katusa: Russia’s Unfazed by Falling Oil Prices

Oil is not quite as powerful a weapon against modern-day Russia as one might think.

By arguing that the slump in oil prices will finish off Russia just like it did the Soviet Union, Ambrose Evans-Pritchard, writing in the Daily Telegraph, is forgetting how far Russia has come since those dark days.

It is true that the USSR couldn’t cope with falling oil revenues and that Saudi Arabia is credited with helping to break up the former empire by dramatically increasing oil production from 2 million to 10 million barrels per day in 1985.

And sanctions could make it harder for Russian firms to access Western know-how, and ultimately affect Russia’s oil output.

This short commentary by Marin was posted on the Casey Research website yesterday.

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Greek candidate willing to call European leaders’ bluff

Events have rudely exposed the illusion that Greece's people will submit quietly to a decade of colonial treatment and debt servitude.

As matters stand, it is more likely than not that a defiant Alexis Tsipras will be the elected prime minister of Greece by late January. His Syriza alliance has vowed publicly and persistently that it will overthrow the EU-IMF Troika regime, refusing to implement the key demands.

A view has taken hold in E.U. capitals and the City of London that Mr Tsipras has resiled from these positions and will ultimately stick to the Troika Memorandum, a text of economic vandalism that pushed Greece into seven years of depression, with a 25.9pc fall in GDP, longer and deeper than Europe's worst episodes in the 1930s.

Mr Tsipras is a polished performer on the E.U. circuit. He can no longer be caricatured as motorbike Maoist. But the fact remains that he told Greek voters as recently as last week that his government would cease to enforce the bail-out demands "from its first day in office".

Here's another must read story.  This Ambrose Evans-Pritchard offering put in an appearance on the Internet site at 9:55 p.m. GMT on Wednesday evening---and I thank Roy Stephens for bringing it to our attention.

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OPEC veteran says oil price a 'disaster' and cartel powerless

OPEC is now "powerless" on its own to prevent oil prices falling further because of a 2m barrels per day (bpd) surplus of supply in the market and the cartel should seek a deal with Russia, Norway and Mexico to arrest the decline, according to a senior Gulf official.

Speaking exclusively to the Telegraph, Abdullah bin Hamad al-Attiyah, a senior adviser to the Emir of Qatar and a former president of the Organisation of Petroleum Exporting countries (OPEC) said: "OPEC can't solve this problem alone like before, now it's a different story. Russia, Norway and Mexico all must sit down with OPEC to discuss making cuts."

However, Mr al-Attiyah - who was one of OPEC's longest serving oil ministers when he led the Qatari delegation - said that he doubts the group of 12 producers will agree to an emergency meeting unless producers outside the cartel agree to also rein in production. He added that the oil market currently was suffering from an oversupply in the region of 2m bpd, most of which is coming from production outside the group.

"It's a disaster," said Mr al-Attiyah. "OPEC should meet with non-OPEC countries to resolve this but America will never cut production."

This story appeared in The Telegraph at 2:56 p.m. GMT yesterday afternoon---and it's worth your while as well.  My thanks go out to Roy Stephens one more time.

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Going Nuclear: Russia and India agree to build 12 nuclear power reactors by 2035

Russia and India are ramping up energy ties and will construct at least 12 new nuclear reactors by 2035. Two will be completed by 2016 at the Kudankulam Nuclear Power Plant, Russian state-owned power company Rosatom confirmed Thursday.

"This morning a general framework agreement was signed on the construction and equipment delivery for the third and fourth blocks of the Kudankulam Nuclear Power Plant at the present site. Cement foundations [for the new blocks] will be poured in the beginning of 2016," Rosatom head Sergei Kiriyenko said Thursday, as quoted by Sputnik news agency.

In April, Russia and India agreed to begin phase two of the Kudankulam plant, which includes adding Block 3 and Block 4. It is the only nuclear power plant which meets all the 'post-Fukushima' safety requirements.

This news item showed up on the Russia Today website at 9:58 a.m. Moscow time on their Thursday morning, which was 1:58 a.m. in New York.  It's the third offering in a row from Roy Stephens.

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Greenpeace sorry for Nazca lines stunt in Peru

Greenpeace has apologised for any "moral offence" it has caused, after a publicity stunt on the ancient Nazca lines in Peru.

Activists from the organisation placed a banner next to a figure of a hummingbird, carved more than 1,500 years ago.

The Peruvian government said it would prosecute the activists who took part.

The ancient depictions of animals, including a monkey and a hummingbird that are etched into the arid plain of Southern Peru are a vital part of the county's heritage.

The Greenpeace nutballs really stuck their foot in it this time---and do they ever know it.  This very interesting article found a home on the Internet site at 9:17 p.m. EST on Wednesday evening.  I thank Casey Research's own Jeff Clark for sharing it with us.

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More insane pictures of Russian potash mining destruction

The recent catastrophic accident at Uralkali's Solikamsk-2 potash mine is not an isolated case.

Over the past thirty years, numerous similar accidents, caused by sudden surface subsidence, occurred at potash mines located in and around Berezniki and Solikamsk cities in the Perm Region of Russia.

Berezniki and Solikamsk, the second and third largest cities of the Perm Region, sit on abandoned and existing underground potash mines, some of those located as close as 200-300 meters from the surface.

First major sinkhole occurred at the Berezniki potash mine #3 in 1986. It was later flooded and now has a 210 X 110 meters size---and in 1993-2005, several hundred earthquakes with a magnitude varied from 2 to 5 of the Richter scale, were recorded in the Berezniki-Solikamsk region.

This is another very interesting story, with some fantastic photos embedded as well.  It was posted on the Internet site on Thursday sometime---and I appreciate reader Carl Lindfors bringing it to my attention---and now to yours.

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What Do They Know? CME Implements Gold, Precious Metals Circuit Breakers Up to $400 Wide

With memorandum S-7258, titled "Implementation of New NYMEX/COMEX Rule Regarding Special Price Fluctuation Limits for Certain NYMEX and COMEX Metals Futures and Options Contracts" released moments ago by the CME Group, and set to become effective on December 21, 2014, and which seeks a 5-minute trading halt when "price movements in lead-month primary futures contracts result in triggering events"...  "as a measure that is consistent with promoting price discovery and cash-futures price convergence" in order to "deter sharp price movements that may, for example, be driven by illiquid central limit order books prevailing from time to time in otherwise liquid markets", one wonders why now, and what does the CME know about upcoming volatility, or lack of liquidity, in the precious metals space that nobody else does (and does any of this have to do with the "berserk" algo test from November 25?)?

This must read Zero Hedge piece from yesterday really lit up the Internet---and even if you don't understand all of it, as I don't, it's not the parts that we don't understand that are amazing.  It's been a bit more than 20 years since there have been any trading limits on the precious metals---and as is stated in the one-sentence paragraph above---"one wonders, why now".  I'll be very interesting in Ted Butler's take on this---and once I have his opinion, I'll post it.  The first person through the door with this story yesterday was Howard Brown.  A similar commentary appeared on the Internet site yesterday---and the headline there read "Comex Institutes Trading Collars For Precious Metals"

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Jim Rickards: Global Financial Calamity! U.S. economic collapse imminent

That's the headline to this 34:05 minute video interview that Greg Hunter did with Jim over at the Internet site back on December 5.

Greg has enough hyperbole in the headline to last a lifetime but, in reality, it's probably not far off the mark.

But Greg puts the big GOLD QUESTION to Jim at the 6:45 minute mark---and Jim's answer lasts until the 19:00 minute mark.  For that reason alone this video is a must watch.  I thank reader Brad Robertson for finding it for us yesterday.

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Industrial silver use will jump 27% by 2018 - CRU

More and more applications for silver are being invented, discovered, and, importantly, commercialized, said a new report from the Silver Institute and CRU Consulting, stoking the growth potential from several of the most important industrial silver applications.

Total industrial silver demand is forecast to reach nearly 680 million ounces annually by 2018, according to the “Glistening Particles of Industrial Silver” report scheduled for public release Wednesday morning.

Half of this growth will occur in the electrical and electronics sector, but additional demand will be due to growth in the use of silver in batteries, Ethylene Oxide (EO) in the chemical sector, anti-bacterial uses of silver, the automotive industry, silver coated bearings, and the brazing alloys/solders sector.

“Over the past decade, physical silver demand has seen strong growth, of which industrial demand for silver, has contributed the largest share,” said CRU. Loss from the photography sector have been offset by increasing demand from other sectors as well as new applications, such as silver-zinc batteries, clothing and hygiene.

This rather longish silver-related story appeared on the Internet site on Wednesday sometime---and I thank Bill Busser for sending it our way.  It's worth reading.

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Silver to see 11 million ounce deficit in 2015 – HSBC

The demand and supply balance for silver is likely to swing from a three million ounce surplus in 2014 to an 11 million ounce deficit in 2015, said HSBC in a report focusing on the outlook of silver.

The deficit comes mainly from a reduction in mine production, lower scrap supplies as well as a a halt to government sales. Consequently, the small but persistent deficit should limit further price declines.

Despite the deficit forecast, the bank is keeping its average price for silver outlook at $17.65 for 2015 and expects the precious metals to trade in the price range between $15 to $21 per ounce.

This is all very nice, but in the second paragraph above, the author talks about "a halt to government sales".  As Ted Butler has pointed out, no government has owned any silver for many, many years, so I'm not sure about the accuracy of the data he's using.  Secondly, deficits mean nothing to the price.  Look at platinum and palladium, which have both been in supply/demand deficits for several years now.  It has meant nothing.  The same with silver, because until JPMorgan et al decide, or are the given the word, prices are going nowhere---and only the willfully blind, or those whose jobs depend on them not seeing it, won't admit it.  Einstein was right.  The only thing that exceeds the amount of hydrogen in the world, is human stupidity.  I thank Casey Research's Jeff Clark for sharing it with us.

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